Chinese bank rejects Nigerian government’s $22billion loan request

The Federal Government’s proposal for a loan of $22,798,446,773 has been denied by the China Exim Bank. (22.7 billion dollars).

The House of Representatives announced this while voting to accept a counter request for a loan from China in the amount of N900 million on the chambers’ floor.

The Kaduna-Kano section of the Nigerian Railway Modernization Project was supposed to be funded by the loan that was turned down, according to The Punch.

Due to worries about Nigeria’s capacity to repay the loan and the project’s potential effect from the COVID-19 pandemic, the Chinese Exim Bank withdrew its support.

Chairman of the House Committee on Rules and Business, Abubakar Fulata proposed a motion to amend the legislative chamber’s previous resolution, and give fresh approval for$973,474,971.38 loan from China Development Bank following an unsuccessful loan deal.

The motion, titled ‘Rescission of the 2016-2018 Federal Government External Borrowing (Rolling) Plan,’ was based on the fact that the plan had already been approved by the Senate and the House of Representatives on March 5, 2020, and June 2, 2020, respectively.

Fulata reminded the House that the National Assembly had approved $22,798,446,773 ($22.7 billion) for the 2016-2018 Medium Term External Borrowing (Rolling) plan.

He also noted that the Federal Ministry of Finance had requested modifications to the financing proposal for the Nigerian Railway Modernisation Project due to the COVID-19 pandemic, which led to China Exim Bank withdrawing its support for the project.

The lawmaker went on to explain that the contractor, CCECC Nigeria Limited, had collaborated with the Federal Ministry of Transportation to engage China Development Bank as the new financier for the project, with a loan amount of $973,474,971.38 ($973 million).

Fulata, therefore, prayed the House to rescind its decision on the financier and harmonised terms and approve the change of financier from China Exim Bank to China Development Bank.

Lawmakers unanimously granted the prayer, and the House of Representatives approved the conditions outlined in the harmonised term sheet, which included details such as the segment covered by the loan, the financier, the loan type, maturity period, currency, interest rate, commitment fee, and upfront fee.